Hesketh lobbies for break-up sale of Tote

Lord Hesketh, the former Conservative minister and racecourse owner, has called for a radical rethink of the planned sale of the Tote as the Government weighs up a £300m offer from a consortium led by Arena Leisure for the state-owned bookmaker.

Lord Hesketh, a former chief whip who owns Towcester racecourse in Northamptonshire, argues that the racing industry would be better off if the Tote's 540 betting shops were sold at full market value in a trade sale, with part of the sale proceeds going to racing. The Tote's seven-year monopoly licence to run pool betting should revert to racing, which would tender it to a bookmaker to provide income to the industry, to be invested in prize-money and tracks.

The £300m offer was submitted two weeks ago by a consortium consisting of Arena Leisure, the quoted owner of seven tracks, Racecourse Holdings Trust, part of the Jockey Club and the operator of 13 tracks including Cheltenham, Aintree and Epsom, and the Racecourse Association.

Another racecourse owner, Northern Racing, dropped out of the consortium last month, amid industry concerns over how the offer can be financed.

However, the offer could also run into problems with European regulators, who blocked a previous attempt to sell the Tote at a knock-down price of £150m as illegal state aid. The Adam Smith Institute, a free-market think-tank, has already lodged a complaint with the European Commission over the sale, arguing that the Tote is worth between £520m and £800m.

With a decision expected from the Government as soon as this week, speculation has been growing that ministers might open the auction to other bidders, including commercial rivals such as Gala Coral, Britain's third-biggest bookie, which is known to be interested.

The Government pledged in its election manifesto to sell the Tote to racing to safeguard future funding of the sport, but could expect a higher price if it was sold to a gambling group. Britain's two largest bookmakers, William Hill and Ladbrokes, are prevented from bidding on competition grounds. If Gala acquired the Tote, it would rival its two larger competitors, with about 1,900 betting shops.

Hugo Swire, the Conservative spokesman for culture, media and sport, called yesterday for a firm timetable for the Tote sale and greater transparency. He said: "The Government must be sure that it is acting in the best interests of the racing industry as a whole, and is not involved in some sort of cosy behind-the-scenes deal."

Lord Hesketh has written to Mark Elliott, the chief executive of Arena Leisure, raising questions over the financial benefits to racing from buying the Tote. "If the offer has been made on behalf of racing please could you explain where this money has come from and what commitments have been made to the funder(s) on behalf of racing?" he asked."Unless [our] questions have been addressed thoroughly, we would question whether the acquisition of the Tote is in the best interests of 'racing,' or indeed the public purse."

Mr Elliott declined to answer the questions, saying that any discussions with the racecourses would be "purely hypothetical" until a deal with the Government was close. "It remains our intention to approach the racecourses once we reach a non-hypothetical state," he wrote.

Last week Mr Elliott described the consortium's offer as "compelling," saying it safeguarded the Tote's 300 jobs in Wigan and kept its profits in the industry's hands to be used for facilities and prize money. He rejected claims that the profits would disappear into the pockets of Arena shareholders.

The course from pool betting to full bookie

The Tote was established by Act of Parliament in 1928 and its original purpose was to offer on-course pool betting on horseracing as an alternative to starting-price betting with bookmakers and to distribute its profits for "the improvement of breeds of horses or the sport of horseracing".

When the Betting Levy Act of 1961 brought in a levy on bookmakers the Tote was no longer the only source of betting revenue for racing and its spending powers were transferred to the Levy Board.

Bookmakers were permitted to open betting shops, but the Tote was restricted to opening shops offering pool betting on horseracing. These restrictions were lifted in 1972 and from then the Tote could also operate as a bookmaker.

In 2001 the Government decided to sell the Tote to a Racing Trust to allow it to compete commercially.

Today the Tote has more than 450 retail betting shops and 190,000 registered clients from whom it accepts credit and debit bets at its telephone call centre and the internet. It is the fourth largest bookmaker in Britain. A proportion of its profits still go directly to the racing industry.

John Cobb